Tony Abbott has weighed into the tax debate by encouraging the Turnbull government to reflect the Coalition's core project of delivering lower taxes, amid an extensive party room discussion of the merits of keeping or modifying negative gearing.

What is the mandate that Malcolm Turnbull can seek that can withstand both his conservative wing and the white anting of Tony Abbott? Photo: Andrew Meares

Mr Abbott said the budget did not have a revenue problem but a spending one, and declared you cannot reduces taxes by raising them.

In response to his predecessor's praise, Mr Turnbull said Mr Abbott had governed "openly and courageously", telling Coalition MPs that his new government was necessarily a mix of existing and new ideas.

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The outbreak of goodwill, dubbed humorously as "an almost nauseating exchange of compliments" occurred after Mr Abbott broke his policy silence in the party room to weigh into the tax debate.

Several MPs spoke in the party room debate led off by the West Australian MP Rick Wilson in which he had advocated that Scott Morrison not proceed with the option of narrowing the availability of negative gearing on investment homes.

According to one source, Mr Abbott spoke more broadly of tax than merely the negative gearing issue reminding MPs of the need to keep taxes low and to address budget shortfalls exclusively through spending cuts rather than tax increases.

Mr Abbott told the party room that Mr Turnbull had "brilliantly destroyed" Labor on the floor of Parliament.

It is understood the speech received several enthusiastic "hear, hears" as one MP put it, signalling wide general support.

The ABC has reported that among other comments, Mr Abbott stated that it was "...time for the leadership to take on the savings challenge again".

However, in a sign of divided opinions on the matter, three MPs, Ewen Jones, Russell Broadbent, and Andrew Southcott - all of whom are close to Mr Morrison - called on colleagues to allow the Treasurer the space required to do his job.

The government has previously flagged it could look at negative gearing but only at what it has called "excesses" of the tax break.

In the light of the GST being removed from considerations, Mr Morrison is examining a clutch of other options, including superannuation tax breaks, workplace deductions, and, reportedly, negative gearing.

He wrapped up the debate by warning that leaving things unchanged was itself a decision because it willed into being, a set of circumstances.

That has several backbench MPs worried, because it suggested Mr Morrison may still be favouring a change to negative gearing by wealthy individuals among the limited revenue and savings options open to him.

Mr Turnbull listened intently to the debate and is said to have responded encouragingly to those arguing to leave negative gearing alone, in order to avoid damage to the real-estate market, but also to clear the way politically for the government to campaign against Labor's proposed changes.

Labor has proposed limiting negative gearing to newly built investment properties from July 2017 and halving the current 50 per cent capital gains discount on their disposal, in a change Mr Turnbull has claimed would smash the property market, see existing house prices drop by as much as 10 per cent, and cause flow-on effects in the economy.